Further development on Vietnamese tax applicable to offshore capital transfer

In April 2015, the General Department of Tax (GDT) instructs a provincial tax department to consider imposing corporate income tax (CIT) on an offshore capital transfer transaction (Offshore Transfer) between a French seller and a Vietnamese buyer (2015 Instruction). The 2015 Instruction has raised a Vietnamese tax concern over offshore capital transfer activities. In February 2016, the GDT issues additional guidelines (2016 Instruction) for the Offshore Transfer to clarify some unclear issues under the 2015 Instruction. In particular,

Acquisition Registration in Vietnam – Scope of Application

Under the Investment Law 2014 and Decree 118/2015, an Acquisition Registration will be required:

if a foreign investor or a deemed foreign investor acquires any percentage of ownership interest in a target company, which involves in business subject to a FIE Condition; or
if a foreign investor or a deemed foreign investor acquires ownership interest in a target company, which does not involve in any business subject to a FIE Condition but the proposed acquisition results in (1) the aggregate ownership interest held by foreign investors or Deemed Foreign Investors in the target company being equal to or exceeding 51%; or (2) the aggregate ownership interest held by foreign investors or deemed foreign investors in the target company, which already exceeds 51%, increasing.

Changes to regulations relating to the legal representative of a Vietnamese company

The legal representative plays an important role in the operation of a company. New changes introduced by the Enterprise Law 2014 and Civil Code 2015 regarding legal representative of a company are both positive and negative.

Vietnam Business Law